Kickoff to Q3 Earnings Season – October 16, 2019
Q3 earnings season unofficially began on Tuesday with a slew of big bank and big-name reports.
- The early read is favorable, as companies top low expectations.
As of October 14, earnings of S&P 500 companies2 are forecast to decline 3.2% versus one year ago (Refinitiv).
Revenue is projected to rise 3.5%, signaling continued pressure in margins amid higher costs. However, rising revenue also signals the economy continued to expand in Q3.
One other positive—it’s still very early but of the S&P 500 companies that have reported so far (5%), 90% have topped profit expectations.
Investor’s corner
We’ve seen this story before. Companies offer conservative guidance, companies top a low hurdle, and the season ends on a brighter note than it began. It has happened throughout the expansion.
Medium and longer term, corporate earnings have the biggest influence over stock prices.
Over a shorter period, many headlines can influence day-to-day trading. This year, trade headlines have had a big impact, while the economic fundamentals have taken a backseat.
Still, an expanding economy and the ability of firms to top a low hurdle have cushioned the downside when volatility has picked up.
Created 2019-10-16 14:35:25
